The local market hit a four-week low after being affected by the US-China trade war.Credit:Peter Braig

"The trade war between the US and China has returned after talks to resolve their trade differences broke down," said AMP Capital chief economist Shane Oliver.

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"Our base case remains that a deal will be reached to resolve the issues, but the risks to global growth are now higher and sharemarkets may need to fall further in the short term to remind both sides of the need for a deal."

On the local market, the financial sector extended its declines from the previous session, as the major banks weighed down the market.

NAB lost 4.7 per cent to close at $24.24 after trading ex-dividend, Commonwealth Bank slid 1.3 per cent to $72.57, ANZ closed the session 1.3 per cent lower at $26.10 and Westpac fell 0.8 per cent to $26.90.

Macquarie Group lost 2.2 per cent, finishing at $117.50, Insurance Australia Group fell 1.8 per cent to $7.82 and QBE Insurance declined 1 per cent to $12.50.

Growth stocks were also among the hardest hit on Tuesday. Wisetech Global slid 2.2 per cent to $21.30, Afterpay Touch lost 0.7 per cent to finish the session at $26.00, Altium declined 1.6 per cent to $30.82, Nearmap dropped 3.9 per cent to close at $3.43 and Xero ended the session at $53.75, down 1.5 per cent.

Mayne Pharma declined 15 per cent to 56.5¢ after reporting a 32 per cent fall in revenue from its generic products segment between January and April. The company's shares touched their lowest level since January 2015 early in the session before recovering slightly through the day,

Strong safe haven demand drove the price of gold higher during the Northern Hemisphere trading session and local investors responded, with the listed gold miners soaring on Tuesday.

Newcrest Mining added 1.8 per cent to close at $26.05, Evolution Mining rose 7.2 per cent to $3.57, Northern Star Resources advanced 4.3 per cent to $9.45, Regis Resources climbed 6.8 per cent to $4.72, Saracen Mineral rose 4.3 per cent to $3.19 and St Barbara closed the session at $3.32, up 3.4 per cent.

InvoCare shares rose 4.2 per cent to $15.22 on Tuesday after reporting a 9 per cent increase in profits for the March quarter compares with the same time a year ago. The funeral home operator said the death rate was beginning to return to long-term averages and a particularly nasty flu season could increase that rate.

Stock watch

COMMONWEALTH BANK

Bell Potter reduced its price target on Commonwealth Bank following the bank's trading update on Monday which net profits had been hit by $714 million worth of additional pre-tax customer remediation and program provisions. In response, the broker reduced its own profit forecast by 12 per cent, given the material notable items and higher loan impairments. Analyst TS Lim said subsequent years' forecasts had been lowered by 5 per cent on the back of rebasing non-interest income and credit quality expectations. "While CBA remains ahead of its peers in the remediation space, underlying performance was weakened by lower NIM and ongoing other income plus an uptick in credit charges," the analyst said. Bell Potter reduced its price target from $76 to $73, maintaining its 'hold' recommendation.

What moved the market

AUSSIE OUTPERFORMANCE

The Australian sharemarket has been resilient during May as most other major global markets have slipped. While the first two weeks of the month have been tough on most global markets, the S&P/ASX 200 Index is down just 0.4 per cent so far. In the same period, the S&P 500 has dipped 4.5 per cent and the Euro Stoxx 50 has slid 5.5 per cent. The Shanghai Composite has been among the globe's worst performers, falling 5.7 per cent for the month of May so far. Among the major global sharemarkets, only New Zealand has performed better than Australia as the country's central bank cut its official cash rate last week.

IRON ORE

Vale's plan to reach 400Mt per annum worth of iron ore production in the next two to three years is "ambitious" according to analysts, as the Brazilian miner struggles to return to the target level it set itself for 2019. "The forecast carries risk, not only because it is ambitions, but because it suggest that Brazilian regulators will eventually be satisfied with the safety measuring being undertaken at certain mines and dams," said CBA mining & energy commodities analyst Vivek Dhar. He added he thought it would take the miner at least three years to return to its 2019 target. "But any delays to Vale's production outlook poses upside risks to our view," he said.

SWISS FRANC

The Swiss franc benefited from Monday's tit-for-tat trade escalation as foreign exchange investors pumped money into more safe saven currencies. The Swiss franc rose 0.5 per cent against the US dollar, hitting its highest level against the greenback in almost a month. The franc is widely seen as a safe-haven currency alongisde the Japanese yen, due to the stability of both the Swiss government and its financial system. The country's lower inflation rate is also attractive and people generally have confidence in the country's central bank.

WEAK JOBS GROWTH

NAB's April business survey showed the economy is continuing to weaken with employment conditions weakening to their lowest level since January 2016. The poor employment conditions hint at weakness in the labour market which could show through in this week's official economic data. "As we have highlighted previously, the key question is how the economic slowdown and the loss of business confidence will impact business spending decisions," said Westpac senior economist Andrew Hanlan. "We expect jobs growth and investment to slow. The April survey provides evidence of this."